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Bank Of England Eases Liquidity Rules For Banks

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About time - the onerous cost of borrowing for the banks has been reduced! :lol:

Hallelujah, for too long banks have been finding it crazily expensive to obtain liquidity from the central banks. <_<

Edited by Sour Mash

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The state is prepared to fund at rates the private sector is not. This measure should only be used in a crisis not business as usual. It will create a permanent market distortion that could cause an even greater imbalance to the economy.

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The state is prepared to fund at rates the private sector is not. This measure should only be used in a crisis not business as usual. It will create a permanent market distortion that could cause an even greater imbalance to the economy.

To be fair, the article says the relaxation is for banks finding it hard to finance:

Earlier, Mr. Carney told bankers that the BOE will, in the future, allow banks to borrow cash more cheaply, for longer, and against a wider range of collateral if they run into funding trouble, in a sweeping change of the central bank's liquidity rules.

This could be a between the lines blast at Government demanding more lending while the lifeboat master mentions he is going to have to lower the lifeboats for when it all goes even more wrong than it is already.

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Whereas previously only high quality assets were acceptable, in future, lesser-quality investments such as mortgage-backed securities will be allowed.

http://uk.finance.ya...-165632159.html

Why is this in any way surprising? These MBS are unlikely to improve and therefore can't be sold on the secondary market without an enormous discount. It was inevitable that the BoE would follow the Fed, buy them and run them off to maturity.

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